A power of attorney is a document that allows you to choose someone to make decisions on your behalf. Many seniors understand the benefits that a power of attorney (POA) provides for them. If a senior becomes mentally incapacitated, they would not be able to make very important decisions for themselves. However, there are limitations of a power of attorney that every senior should be aware of before creating this document.
What Does a Power of Attorney Do?
When you decide to have a power of attorney, in the event that you become incapacitated, it stops a court from being able to make financial decisions on your behalf. Without a POA, the court can appoint someone to make decisions for you.
When you designate an attorney-in-fact, you can choose to let them make decisions for you immediately, or in the event that you are unable to make your own. A POA can give an agent the permission to do any or all of the following:
- Pay bills;
- Open, close, and manage bank and stock accounts;
- Access safe deposit boxes;
- Buy and sell property, including the senior’s residence;
- Invest or withdraw money from investments;
- Prepare and file tax returns;
- Pay for senior care services;
- Decide on which living situation is best for the senior;
- Place an elder in a senior care facility; and
- Make any important decision that is not health-related.
In order to designate someone to make decisions regarding all aspects of your healthcare, you will need a legal document called a healthcare power of attorney.
Power of Attorney Requirements
There are a few requirements to become an attorney-in-fact. The first is that the person should have a soundness of the mind. That is, they should be mentally competent and be acting of their own choice. They should not be pressured into it, as a POA places great responsibility on them.
When the document is signed, it must be notarized. If not, at least two adults that are unrelated to you, and are not named as attorney-in-fact, must witness you sign the document. In some states, you will also be required to record the POA with the county recorder’s office.
What are the Limitations of a Power of Attorney?
A power of attorney is limited to the specific authorizations in the document. However, in general, states do not allow the POA to change or cancel a will. The agent cannot pressure a senior to do something that they wouldn’t likely do if they were healthy.
Some states will allow agents to give gifts from the principal’s estate, but the POA must specifically state it. You will want to look at your state POA laws for more information. All POAs are terminated when the principal dies.
There are also limitations of a power of attorney for the principal, or senior. The POA document itself does not protect seniors against wrong use of the document. That is one major reason why you should have an eldercare attorney you trust to advise you in your senior planning.
Protecting Yourself
Remember that the POA agents are not above the law. There are reasons that there are limitations of a power of attorney. Agents will face penalties if they abuse their powers. POA agents can be sued, ordered to return money or property wrongfully acquired under a POA. If an agent is found to intentionally abuse his power or principal, police can get involved. This can result in jail time and fines.
As long as a senior is still competent, they can invalidate a POA at any time. If you suspect that your agent may not be acting in your best interest, you should immediately revoke the POA immediately.
